ADU financing: why the money is the hard part

What Terner found, and what this page is for

The Terner Center for Housing Innovation at UC Berkeley, with the Center for Community Innovation and, on the financing paper, the USC Lusk Center, owns the homeowner-facing evidence that financing is the binding constraint on California ADU production. This page cites that work as Terner’s. It does not restate it as ours.

In Reaching California’s ADU Potential (August 2020), a Center for Community Innovation survey of California jurisdictions found that lack of financing was the number one barrier to more widespread ADU construction — almost twice as influential as physical site limitations and lack of desire or awareness among homeowners. Traditional products were not designed for the job; GSE loan-to-value caps on cash-out and home equity often left too little proceeds to fund the unit.

In Implementing the Backyard Revolution (April 2021), Chapple, Ganetsos and Lopez surveyed more than 800 California homeowners with 2018 or 2019 permits or certificates of occupancy.

Sixty-two percent depended wholly or partly on cash savings or money from a friend or a relative. Of the 43 percent who took a bank loan, 66 percent used a HELOC, 41 percent refinanced, 7 percent obtained a construction loan, and 2 percent took a personal loan (shares exceed 100 percent because some used more than one).

Median construction cost in that survey was $150,000, or $250 per square foot.

ADU Construction Financing (Green, Metcalf, Garcia and Valchuis, July 2022) named three inhibitors on government-backed renovation loans: agencies did not recognize income an ADU may produce; appraisals often undervalued the unit; and eligibility guidelines limited where and who could build.

Renovation loans also stayed unused because they were expensive, slow, denied at high rates, and disliked by contractors waiting on draws.

ADUs for All (August 2022) heard the same from low- and moderate-income BIPOC homeowners: cost first, products not suited, cash-out capped at 80 percent of value, prospective rent not counted.

HyreADU analysis: those papers described a market in which the unit’s future rent could not be used to qualify the loan that would build it. Parts of that description are now out of date.

FHA began allowing accessory-unit rental income as effective income in October 2023. Freddie Mac already allowed ADU rent on a one-unit primary, with documentation, and still does.

Fannie Mae put ADU rent into the standard rental-income chapter in October 2025, with Desktop Underwriter support from March 2026.

The follow-on that is actually useful in 2026 is the remaining treatment: which income, on which transaction, documented how, and whether projected rent from an unbuilt unit counts. That is this page.

The products, as types

There is no dedicated, widely available “ADU loan” at GSE scale. Homeowners who have built units have used the same first-lien and second-lien products that finance other residential work, plus cash, plus — in some cities, in some budget years — a public grant or a housing-trust loan.

The table is types, not brands. A named public program appears only as an example of a type, with the page we retrieved and the status that page published.

What a product can fund, whether projected ADU rent counts toward qualifying, typical lien position, and where the product breaks are the columns that decide deals.

Typical lien position is structural (first versus second), not a promise about a given lender’s closing.

“Where it breaks” is the failure mode we can document from the guide or the program page, not a prediction about your file.

Rates are omitted on purpose. A HELOC, a cash-out refinance and a construction-to-permanent loan price in different markets on different days. Putting a number here would be an invention. Type a quote into the financing comparison if you have one.

The rule that decides most deals: projected rent still does not count

The public conversation caught up with one half of Terner’s 2022 finding. Agencies now recognize ADU rental income — with a 30 percent cap — as qualifying income on a one-unit principal residence.

The half that still decides construction deals is the other half: the income has to be from a unit that exists, or from rent that will start before the first payment on the new mortgage.

Fannie Mae Selling Guide B3-3.8-02, “Rental Income from the Subject Property,” current as of the 2 September 2026 Guide, lists ADU limitations in a dedicated row: rental income is only allowed from one existing ADU; purchase or limited cash-out refinance transactions only; the qualifying rental income amount from the ADU is limited to 30 percent of total qualifying income.

Announcement SEL-2025-08 (8 October 2025) put that treatment into the Guide. Desktop Underwriter version 12.1, released the weekend of 21 March 2026, applies the 30 percent cap in the AUS. Short-term rental income cannot be derived from an ADU (B3-3.8-03).

HomeReady had already treated rental income from a one-unit principal residence with an accessory unit as acceptable qualifying income.

SEL-2025-08 is the change that takes the treatment out of that affordable product and into the standard rental-income chapter. It is not a construction-loan product, and it is not a projected-rent product. The word in the Guide is “existing.”

Freddie Mac has allowed ADU rental income on a subject one-unit primary residence for longer, under Guide Chapter 5306.

The February 2026 ADU fact sheet is the public summary: loan purpose is purchase or “no cash-out” refinance; rental income documented with a lease must not exceed 75 percent of the lease amount; qualifying rental income cannot exceed 30 percent of total income used to qualify; an appraisal is required and automated collateral evaluation is not acceptable when this income is used; the sales comparison approach must include at least one comparable sale with an ADU; the rental analysis needs three comparable rentals, at least one of them a rented ADU; rental income from an illegal ADU may not be used; at least one qualifying borrower must take landlord education on a purchase unless they already have a year of investment or ADU rental management experience.

The construction-loan crux is in Freddie’s ADU FAQ, retrieved 2026-09-05. Asked whether projected rental income from an ADU can be used to qualify when the ADU is being added or renovated with CHOICERenovation proceeds, Freddie’s published answer is: projected net rental income may be used in the debt-to-income ratio only if rental payments will begin on or before the date the first mortgage payment is due. If the lease provides for payments to begin after that date — for example because the ADU is still being constructed or renovated — the projected rental income cannot be used for qualifying.

FHA’s treatment is in Mortgagee Letter 2023-17 (16 October 2023), which established accessory-unit rental income as effective income for forward mortgages and was to be incorporated into Handbook 4000.1. A one-unit property with a single ADU remains a one-unit property.

Rental income from the subject may be considered when the property “is or will be” a one-unit dwelling with an ADU. With limited or no rental history, the mortgagee uses 75 percent of the lesser of the appraiser’s fair market rent or the lease.

The amount of ADU rental income used as effective income must not exceed 30 percent of total monthly effective income. A renter of an ADU is not a boarder.

ADU rental income cannot be used as effective income on a cash-out refinance. The “will be” clause is the documented difference from Fannie’s “existing.” It is not a promise that a given FHA lender will count rent from a unit that has not been built. Overlays apply; the 203(k) draw process still has to close.

HyreADU analysis: put the three treatments next to a construction timeline and the barrier is no longer mysterious.

An ADU in California is commonly a twelve-to-twenty-four-month job from design through certificate of occupancy — see permit times by city and permits versus completions. A renovation mortgage’s first payment is due long before that certificate.

The rent that would service the new debt is not an existing Schedule E line and is not a lease with payments starting this month. Fannie will not count it. Freddie will not count it.

FHA’s “will be” is the only published opening, and it still caps the income at 30 percent, still forbids it on cash-out, and still requires an FHA lender willing to originate a 203(k) or equivalent.

The GSE updates help the owner who already has a rented ADU, and the buyer of a house that already has one.

They do not, on the published text, size a construction loan against the rent of a unit that does not yet exist.

What appraisers are instructed to do with the completed unit

Underwriting income and appraised value are different questions, and Terner’s 2022 paper treated them as two of the three inhibitors. The value question is: when the unit is finished, or when the loan is sized on as-completed value, what is the appraiser told to do?

Fannie Mae B4-1.3-05, Improvements Section of the Appraisal Report (4 June 2025 in the current Guide), requires a description of the ADU and an analysis of any effect it has on the value or marketability of the subject.

Living area of the ADU is not bundled into the primary dwelling’s finished above-grade square footage; it is reported and adjusted on a separate line in the grid, unless the ADU is contained within the primary dwelling with interior access and is above grade.

A standalone structure that does not meet ADU minimums is treated as an ancillary structure and adjusted on contributory value.

Whether the property is a one-unit with an ADU or a two- to four-unit property is a highest-and-best-use determination, and the characteristics the Guide names include separate utility meters, a unique postal address, and whether the unit can be legally rented.

Zoning is its own paragraph. An ADU that is not allowed under zoning (not allowed under any circumstance) can still be eligible if the lender confirms insurance will not be jeopardised, the illegal use conforms to the neighborhood and the market, the property is appraised on current use, the report states the non-compliant use, and the report demonstrates typicality through at least two comparable sales with the same non-compliant zoning use.

Aged settled sales are acceptable if recent sales are not available; the report must still include a total of three settled sales. That is a legally nonconforming or illegal-use path, not a “the ADU does not count” path. It is also a path that depends on finding those comps.

Freddie Mac’s fact sheet, when ADU rent is used to qualify, is more prescriptive on comparables: at least one comparable sale with an ADU, three comparable rentals supporting the opinion of market rent, and at least one of those rentals a rented ADU.

The appraiser must describe general condition, finished square feet, and room count including bedrooms and bathrooms. Automated collateral evaluation is not acceptable in that case.

The extra demand for ADU sale comps and rented-ADU rent comps is the operational version of Terner’s “appraisals often undervalue” finding: in a market with few arm’s-length ADU sales, the Guide’s own comparable requirements are hard to meet, and a thin-comp appraisal is how a renovation loan dies even when the income chapter would otherwise allow the rent.

Fannie Mae’s March 2026 Appraiser Update, covering the UAD 3.6 eligibility expansion, tells appraisers that when the client requests a market-rent estimate for the ADU it should be based on true ADU rentals when available, and that when those are scarce, appropriate substitute rentals may be used, with care about the difference between whole-property rents and individual-unit rents from multi-unit properties.

Form 1007 must clearly indicate that the reported monthly market rent applies only to the ADU.

Under UAD 3.6, Form 1007 is not used; market rent is reported in the Rental Information section and Rental Comparison Grid of the URAR.

HyreADU analysis: the appraisal instruction is to value the unit as a market feature, separately from the main house, against comps that look like it. That is the right instruction. It is also why as-completed renovation loans remain scarce in practice.

An as-completed value that does not fully credit the ADU shrinks the loan. An as-completed value that needs ADU comps in a neighborhood that has not sold many will be slow, or will come back with a condition.

Do ADUs add value? takes the appraisal evidence on its own. The financing consequence is simpler: a construction product that is capped at a percentage of as-completed value inherits every weakness in that value.

Construction-to-permanent, as a type

A renovation or construction-to-permanent mortgage is the product type that looks, on a slide, as if it were designed for this job.

It is sized on the property after the work, funds are held in escrow and released against inspections, and the same loan can convert to a permanent first lien.

Fannie Mae’s HomeStyle Renovation, Freddie Mac’s CHOICERenovation, and FHA’s 203(k) are the named GSE and FHA forms of the type. They are not the only construction loans in the market; portfolio lenders and some credit unions originate their own.

Those are examples of the type when a lender publishes a product page. They are not surveyed here, and they are not recommended.

Fannie Mae Selling Guide B5-3.2-01 lists accessory units among acceptable outdoor buildings and structures when allowed by local zoning.

HomeStyle may be used to purchase appliances as part of a remodel, to finish a home that is at least 90 percent complete, and to construct those structures. It may not be used for a complete tear-down.

B5-3.2-02 caps renovation cost at 75 percent of the lesser of purchase price plus renovation costs or as-completed value on a purchase, and at 75 percent of as-completed value on a refinance; manufactured-home renovations are capped at 50 percent.

The appraisal is as-completed (B5-3.2-03). Work is done by a licensed contractor the borrower chooses and the lender accepts; the lender may not pick the contractor.

HomeStyle Refresh (B5-3.3-01) lists “adding or renovating an accessory dwelling unit” as an eligible small-scale improvement.

Freddie Mac’s public ADU page names CHOICERenovation as the product to add a new ADU or renovate an existing one, including a factory-built ADU.

The fact sheet notes that CHOICERenovation can use a no-cash-out refinance to pay off short-term financing that funded ADU renovations completed before the note date. That is a take-out path, not a projected-rent path.

The FAQ quoted above is what happens if you try to qualify the CHOICERenovation loan itself on rent the unit does not yet produce.

FHA ML 2023-17 updated 203(k) eligible improvements and added a one-unit with ADU as an eligible property type for new-construction financing. The same letter is the source of the cash-out prohibition on ADU income.

A 203(k) can finance adding an ADU; counting that ADU’s future rent toward the qualifying income is a different, narrower question, answered by the “is or will be” clause and by whatever overlay the FHA lender applies.

Chapple, Ganetsos and Lopez (2021) found that 7 percent of the homeowners who took a bank loan used a construction loan from a local lender.

Terner’s 2022 financing paper found renovation loans “theoretically well suited to help homeowners without significant equity but remain relatively unused,” and listed cost, time to close, denials, and contractor resistance as the operational reasons.

HyreADU analysis: the 2023–2025 income updates did not remove those operational reasons, and they did not convert the renovation product into a loan that underwrites future ADU rent. The type still exists.

The type is still the right type for an owner who has income and credit to qualify without the ADU’s rent, and who can find a lender that originates it.

It is not, on the published guides, the product that lets the unit’s rent qualify the loan that builds the unit. That is the gap Terner named, and it is still the gap.

HELOC, cash-out, and the first-lien trap

Most owners who borrowed used a product that does not know the ADU exists except as a future improvement on a property whose current value and current income already have to carry the debt.

Chapple, Ganetsos and Lopez (2021): of bank-loan users, 66 percent used a HELOC and 41 percent refinanced the primary residence. Those are second-lien equity extraction and first-lien cash-out (or a refinance that raised proceeds). Both are sized on the house as it stands.

A cash-out refinance replaces the existing first mortgage. Fannie Mae’s Eligibility Matrix, retrieved 2026-09-05, caps cash-out at 80 percent LTV on a one-unit principal residence (75 percent on two-to-four units).

That is the cap Terner cited in 2022, and it is still the cap. ADU rental income is not on Fannie’s eligible-transaction list for this purpose, and FHA forbids it on cash-out.

The other cost is the rate on the whole loan. An owner sitting on a first mortgage originated in 2020 or 2021 who cash-out refinances in 2026 refinances the entire balance, not only the cash taken out for the ADU.

Whether that is a trade depends on the rate already held. This page will not guess that rate. The financing comparison will amortise the quote you type; it will not tell you to replace the first.

A HELOC or closed-end home-equity loan leaves the first mortgage in place.

That is why it dominated the Chapple survey’s bank-loan mix, and why it remains the default conversation when the existing first is cheaper than anything a refinance would replace.

It is a second lien against current equity. Projected ADU rent does not increase the line.

Combined loan-to-value is against today’s appraisal, so a thin appraisal of the unimproved property is as binding here as it is on a cash-out. Variable-rate lines reprice; that is a product feature, not a forecast.

Personal loans and cards appear at the margin — 2 percent of Chapple’s bank-loan users, and a larger unsecured-debt share in Terner’s 2022 compilation of the same survey (7 percent unsecured, 3 percent other, shares overlapping).

They are how design fees and deposits get paid before a construction facility exists. They are not a construction facility.

HyreADU analysis: the first-lien trap is the reason a low existing mortgage rate and a high ADU cost can coexist with “I cannot finance this.” Cash-out would fund the unit and destroy the rate.

A HELOC would keep the rate and may not raise enough against current equity, especially after a cash-out LTV-style combined cap.

A renovation first lien would be sized on as-completed value, which is the theoretical way out for a low-equity owner — and is the product almost nobody used.

The underwriting treatment of projected rent is why that theoretical way out does not, in the published guides, include the ADU’s rent in the qualifying income. Equity and current income still have to do all the work.

CalHFA’s ADU Grant: program fact, not a live offer

The California Housing Finance Agency’s ADU Grant Program is the named statewide product most homeowners have heard of, which is why it has to be described as what it was and what it is. It is not open.

CalHFA’s ADU Grant page and the Special Programs block on the lender handbook page both state, as of 2026-09-05, that the latest round of ADU funding was fully allocated on 28 December 2023.

The Agency is keeping program information up so partners can process grants still in the pipeline.

The same pages warn that if anyone approaches you saying they can help you get an ADU Grant, it is a financial scam, and that names or numbers should be sent to marketing@calhfa.ca.gov.

HCD’s “Funding for ADUs” directory, retrieved the same day, still describes the CalHFA grant in the present tense (“provides up to $40,000”). We follow CalHFA as the administrator. Present-tense descriptions on third-party pages, including a state department’s directory, are not evidence that a new round is open.

The January 2025 outcome report, filed under Health and Safety Code §51532, is the funding history. CalHFA had $125 million across two phases.

Phase 1 was $81 million in State General Funds from the 2020–21 budget (SB 115, Skinner), plus $19 million in discretionary AB 101 (2019, Ting) funds, for $100 million.

The program launched in September 2021 at a $25,000 grant for pre-development costs, for lower-income households, moderate-income households in a Socially Disadvantaged Area, and moderate-income households with low equity.

In March 2022, in response to rates and construction-cost inflation, CalHFA raised the grant to $40,000, expanded eligible costs to all non-recurring closing costs associated with the construction financing (including rate buydown), and expanded income eligibility to low- and moderate-income homeowners regardless of location or equity.

Phase 2 was a one-time $25 million appropriation in the 2023–24 budget (SB 104, Skinner), with income eligibility narrowed to lower-income homeowners.

CalHFA is not a direct lender. Grants were reserved by a network of partners — lenders, credit unions, nonprofits and local agencies — and wired into a construction escrow the partner managed.

Funds could pay vendors or write down principal on the associated loan (a HELOC is the example the report names). No grant funds could be distributed to the grantee.

There is no expiration date on reserved grant funds; partners must keep projects in process, and a certificate of occupancy is required or the money comes back.

A snapshot dated 20 November 2024: 1,996 Phase 1 reservations, 585 Phase 2, 2,581 active projects, nearly 560 ADUs completed, roughly 1,900 recipients far enough along to have started pre-development.

Of in-progress projects, CalHFA estimated nearly 50 percent still in architecture, design and permitting, about 35 percent under construction, 12 percent completed and waiting on occupancy.

Los Angeles County accounted for 54 percent of grant-fund reservations, against a production share HCD’s Annual Progress Reports put near 60 percent of statewide ADUs since 2018.

The February 2025 Board memorandum on the program is not a funding-status change.

It is an update on alleged fraud in the partner channel, on tax reporting (recipients receive a 1099-G), and on the fact that grant funds still have no expiration date so partners can replace contractors and finish units. It does not reopen the program to new reservations.

HyreADU analysis: the grant was never a construction loan. Forty thousand dollars against a Chapple-survey median of $150,000, or against the higher Bay Area figures Terner has published, is pre-development and closing-cost relief on top of a facility the owner still had to obtain.

That is why the report spends so much space on construction-escrow partners and on the 2022 rate shock that made cash-out and renovation first liens unattractive to owners locked into low existing rates.

The grant reduced the cash a qualified owner had to bring. It did not underwrite future rent, and it is not available to a new applicant on any page CalHFA publishes today.

Local and CDC programs, as a type

Below the GSEs and below CalHFA is a scatter of city, county and nonprofit products: deferred loans to legalize an unpermitted unit, construction-to-permanent loans with an affordability covenant, forgivable loans in exchange for a long rent restriction, technical assistance with no loan attached.

HCD’s funding directory is the state-maintained list of examples. It is a finder, not a live inventory. Amounts on that directory can disagree with the program’s own page.

When they do, the program’s own page is the source of record, and both retrievals are dated.

San Diego Housing Commission’s ADU Finance Program is the largest city-run construction facility we can document from a live program page.

The application site (adu.sdhc.org), retrieved 2026-09-05, offers a loan of up to $250,000 plus no-cost technical assistance after pre-approval, for owner-occupied detached single-family homes in the City of San Diego (921xx), with a minimum credit score of 680 and a $2,500 fee due after approval at construction-loan closing.

Completed units must be rent-restricted to households at or below 80 percent of AMI for at least seven years.

The same page carries a banner: funds are not available for this program in Fiscal Year 2025 (1 July 2024 – 30 June 2025); limited Fiscal Year 2024 funds may be made available first-come, first-approved.

HCD’s directory still lists the program at “up to $200,000.” We report SDHC’s own $250,000 figure and SDHC’s own funding-status banner.

This is an example of the type — a local construction-to-perm with a rent covenant — not a statement that a reader can close it this week.

Oakland’s Accessory Dwelling Unit Loan Program (ADULP) is the legalisation-loan version of the type.

The city’s program page, retrieved 2026-09-05, states in a January 2024 update that the program is closed until further notice and that the information is for reference.

From 2022 to 2023 it offered a deferred-payment loan of up to $100,000, at 3 percent simple interest, no required periodic payment, due on sale, transfer, end of a 30-year term, or when the owner no longer occupies, for low-income owner-occupants (up to 80 percent AMI) in an Opportunity Zone converting an existing unpermitted secondary unit.

Combined LTV was capped at the lower of 105 percent of pre-improvement value or 80 percent of post-improvement value. It is named because it is a documented instance of a housing-department product aimed at unpermitted stock. It is closed.

HCD also lists, as of 2026-09-05, a Santa Cruz County ADU Forgivable Loan Program of up to $40,000 for homeowners who rent to low-income households at affordable rents for up to 20 years; a City of Clovis ADU Finance Program delivered with Self-Help Enterprises; San Mateo County’s One Stop Shop (Hello Housing technical assistance, not a loan); Monterey Bay Habitat’s My House My Home; and pre-approved-plan programs in San José and Chico.

Those last two are permitting products, not financing products; they belong in pre-approved ADU plans. CalHome is a state fund to local public agencies and nonprofits, not a loan a homeowner applies for at HCD.

The 2024 Homeownership Super NOFA set a $250,000 maximum for an award recipient to lend a borrower for ADU/JADU construction. Whether a given city currently has a CalHome-funded ADU window is a question for that city, on that city’s page.

Los Angeles’s ADU Accelerator Program is routinely misdescribed as construction funding. It is a tenant-matching program for owners who already have a permitted ADU, pairing the unit with older, low-income tenants. It is not a grant to build. We name it only so it is not mistaken for one.

HyreADU analysis: local programs are real, they are small relative to statewide permit volume, and they move with council budgets the way CalHFA moved with the state budget.

A page that listed them as open offers would be wrong within a quarter.

A page that ignored them would hide the only products that, when funded, sometimes size on household income and a rent restriction rather than on GSE projected-rent rules.

The honest publication is the type, the named example, the URL, the retrieval date, and the status the administrator published that day.

What the 30 percent cap actually does

Fannie, Freddie and FHA all cap accessory-unit rental income at 30 percent of the borrower’s total qualifying or effective income. Fannie’s own worked example (ADU income fact sheet, still in circulation alongside SEL-2025-08) runs the arithmetic out loud.

Gross ADU rent is haircut 25 percent for vacancy and loss. The result is then capped at 30 percent of total qualifying income.

In that example a borrower with $6,000 of other monthly income, $1,000 PITIA and $1,400 of ADU rent gets $1,050 after the vacancy haircut, then has that figure cut to $1,000 because 30 percent of $6,000 is $1,000.

Without the ADU income the file does not clear the DTI; with it, it does. The cap is doing work.

It is also doing less work than a brochure that quotes the full market rent as if it were qualifying income.

Two further cuts sit on top of the cap. First, the 75 percent factor (Fannie, Freddie, FHA with no rental history) is a vacancy and operating haircut, not a suggestion.

Second, Fannie’s current rental-income chapter distinguishes borrowers with 12 months or more of rental-property management experience from those with less.

With 12 months, positive adjusted net rental income may be used in qualifying; without it, positive ANRI may offset PITIA only. Freddie requires landlord education on a purchase unless the borrower already has a year of relevant management experience.

Inexperienced landlords do not get the full income even before the 30 percent cap.

Short-term rental of the ADU is a dead end for Fannie qualifying income: B3-3.8-03 says short-term rental income cannot be derived from an ADU.

Anyone underwriting a backyard unit as if it were an Airbnb on a Fannie file is not reading the Guide.

Local short-term-rental ordinances are a separate constraint; they are not a GSE income path.

HyreADU analysis: the cap is why “the ADU will pay for itself” is not an underwriting sentence.

A unit that rents at a full market figure large enough to service a $200,000 construction loan will not contribute that figure to DTI.

It will contribute at most 30 percent of the borrower’s other qualifying income, after a vacancy haircut, on a transaction type the Guide allows, from a unit that already exists or whose rent starts before the first payment.

For the owner whose other income is the reason they need the ADU rent to qualify, the cap is the barrier.

For the owner whose other income already qualifies, the cap is irrelevant and the barrier is equity, rate, or the renovation-loan operations. Those are different homeowners.

A single product pitch that treats them as one file is the pitch this page is written against.

ADU rental income and the rent statistics are the companion pieces on what the rents actually look like; the ROI calculator will not put financing in the NOI.

CFPB, overlays, and what we did not find

We looked for a Consumer Financial Protection Bureau rule or guidance that uniquely governs ADU underwriting. We did not find one.

CFPB’s consumer materials on owning a home, mortgages and home-equity products remain the public-facing explanation of how those products work and what a Loan Estimate is. They are cited as consumer reference, not as an ADU underwriting source.

Ability-to-repay and qualified-mortgage rules apply to closed-end residential mortgages generally; they are not an ADU-specific regime.

We also did not find a GSE announcement that projected rent from an unbuilt ADU now counts, without the first-payment-date condition, toward qualifying income on a standard delivery. If that announcement exists after 2026-09-05, it is an update trigger and this paragraph is the first to go.

Lender overlays are the unwritten remainder. A bank can follow Fannie’s Guide and still refuse ADU rent, refuse renovation lending, require a year of landlord experience Fannie would waive in DU, or decline a property because the appraiser could not find an ADU sale comp.

Credit unions and CDFIs that participated in the CalHFA grant — Patelco, Redwood, Self-Help are the three credit unions the outcome report names — are examples of a channel, named as history, not as a product list.

A currently published credit-union ADU construction product would be labeled as an example of the construction-to-perm type, with a retrieval date. We did not retrieve one we were willing to put on this page without turning it into a recommendation.